SENATE probers are keen to keep close watch of the Bureau of Internal Revenue involving the BIR’s so-called “Letter of Authority” (LOA).
Sen. Raffy Tulfo disclosed in advance that he had urged the Committee on Ways and Means “to exercise its oversight power to monitor all” LOAs issued by the BIR.
Tulfo said senators were “prompted to move” because the LOA has reportedly become “a source of corruption, particularly in several special economic zones.”
During a Senate hearing on November 28, Tulfo claimed the LOA “has become a milking cow for many unscrupulous government officials resulting in the loss of millions of pesos in revenue due to corruption.” The senator also demanded that the BIR submit to him “a list of LOAs in the last three years.”
“We should have an assigned group of people to do a thorough follow up on what happened to the LOAs, how much the government earned out of those LOAs and, if there are none, there should be a case filed,” Tulfo added.
He noted that the LOA is issued by the BIR to initiate a tax audit or investigation of a taxpayer. Tulfo also noted the LOA authorizes BIR examiners “to assess the taxpayer’s compliance with tax laws, verify the accuracy of financial records and determine the correct amount of taxes due.”
Revenue Memorandum Circular (RMC) 75-2018 issued by the BIR on September 5, 2018, cited a ruling by the Supreme Court that said “no assessments can be issued or no assessment functions or proceedings can be done without the prior approval and authorization of the Commissioner of Internal Revenue or his duly authorized representative, through an LOA.”
“The concept of an LOA is therefore clear and unequivocal,” the RMC said citing the judicial ruling. “Any tax assessment issued without an LOA is a violation of the taxpayer’s right to due process and is therefore ‘inescapably void.’”